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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Axis Capital Holdings Ltd | NYSE:AXS | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.57 | 0.81% | 71.21 | 71.22 | 69.99 | 70.65 | 460,281 | 23:15:17 |
For the second quarter of 2023, the Company reports:
For the six months ended June 30, 2023, the Company reports:
AXIS Capital Holdings Limited ("AXIS Capital" or "AXIS" or "the Company") (NYSE: AXS) today announced financial results for the second quarter ended June 30, 2023.
Commenting on the second quarter 2023 financial results, Vince Tizzio, President and CEO of AXIS Capital said:
“AXIS delivered strong top- and bottom-line results in the quarter as we further positioned the Company as a specialty underwriting leader. Consistent with our strategic priorities, in the quarter we drove profitable growth across our target markets while generating record performance in numerous areas including the best second quarter premium production in our Company’s history, as well as both the best ever premium and new business production for our specialty insurance business.
"In the first half of 2023, we have accelerated the positive momentum in our performance while capitalizing on favorable market conditions across the vast majority of our lines and leveraging our global platform to elevate our business, culminating in the delivery of our strongest ever six-month operating income per share.
"We’re focused on advancing AXIS as a specialty underwriting leader that produces consistent growth in both profitability and book value for our shareholders.”
Second Quarter Consolidated Results*
* Amounts may not reconcile due to rounding differences.
1 Operating income (loss) and operating income (loss) per diluted common share are non-GAAP financial measures as defined in SEC Regulation G. The reconciliations to the most comparable GAAP financial measures, net income (loss) available (attributable) to common shareholders and earnings (loss) per diluted common share, respectively, and a discussion of the rationale for the presentation of these items are provided later in this press release.
Second Quarter Consolidated Underwriting Highlights2
Three months ended June 30,
KEY RATIOS
2023
2022
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses4
56.1
%
55.3
%
0.8 pts
Catastrophe and weather-related losses ratio
2.6
%
5.3
%
(2.7 pts)
Current accident year loss ratio
58.7
%
60.6
%
(1.9 pts)
Prior year reserve development ratio
(0.5
%)
(0.3
%)
(0.2 pts)
Net losses and loss expenses ratio
58.2
%
60.3
%
(2.1 pts)
Acquisition cost ratio
20.0
%
20.2
%
(0.2 pts)
General and administrative expense ratio
13.3
%
12.9
%
0.4 pts
Combined ratio
91.5
%
93.4
%
(1.9 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
89.4
%
88.4
%
1.0 pts
2 All comparisons are with the same period of the prior year, unless otherwise stated.
3 Amounts presented on a constant currency basis are non-GAAP financial measures as defined in SEC Regulation G. The constant currency basis is calculated by applying the average foreign exchange rate from the current year to prior year amounts. The reconciliations to the most comparable GAAP financial measures is provided above and a discussion of the rationale for the presentation of these items is provided later in this press release.
4 The current accident year loss ratio, excluding catastrophe and weather-related losses is calculated by dividing the current accident year losses less pre-tax catastrophe and weather-related losses, net of reinsurance, by net premiums earned less reinstatement premiums.
Year to Date Consolidated Underwriting Highlights
Six months ended June 30,
KEY RATIOS
2023
2022
Change
Current accident year loss ratio, excluding catastrophe and weather-related losses
56.0
%
54.7
%
1.3 pts
Catastrophe and weather-related losses ratio
2.8
%
5.1
%
(2.3 pts)
Current accident year loss ratio
58.8
%
59.8
%
(1.0 pts)
Prior year reserve development ratio
(0.4
%)
(0.5
%)
0.1 pts
Net losses and loss expenses ratio
58.4
%
59.3
%
(0.9 pts)
Acquisition cost ratio
19.4
%
20.0
%
(0.6 pts)
General and administrative expense ratio
13.4
%
13.1
%
0.3 pts
Combined ratio
91.2
%
92.4
%
(1.2 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
88.8
%
87.8
%
1.0 pts
Segment Highlights
Insurance Segment
Three months ended June 30,
($ in thousands)
2023
2022
Change
Gross premiums written
$
1,684,150
$
1,469,622
14.6
%
Net premiums written
1,021,021
869,419
17.4
%
Net premiums earned
842,751
768,724
9.6
%
Underwriting income
114,653
93,816
22.2
%
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
51.5
%
51.6
%
(0.1 pts)
Catastrophe and weather-related losses ratio
3.1
%
3.6
%
(0.5 pts)
Current accident year loss ratio
54.6
%
55.2
%
(0.6 pts)
Prior year reserve development ratio
(0.3
%)
(0.3
%)
— pts
Net losses and loss expenses ratio
54.3
%
54.9
%
(0.6 pts)
Acquisition cost ratio
18.6
%
18.8
%
(0.2 pts)
Underwriting-related general and administrative expense ratio
13.5
%
14.1
%
(0.6 pts)
Combined ratio
86.4
%
87.8
%
(1.4 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
83.6
%
84.5
%
(0.9 pts)
Six months ended June 30,
($ in thousands)
2023
2022
Change
Gross premiums written
$
3,099,762
$
2,796,886
10.8
%
Net premiums written
1,903,597
1,713,332
11.1
%
Net premiums earned
1,659,206
1,521,539
9.0
%
Underwriting income
218,007
188,209
15.8
%
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
51.8
%
51.0
%
0.8 pts
Catastrophe and weather-related losses ratio
3.1
%
4.0
%
(0.9 pts)
Current accident year loss ratio
54.9
%
55.0
%
(0.1 pts)
Prior year reserve development ratio
(0.2
%)
(0.6
%)
0.4 pts
Net losses and loss expenses ratio
54.7
%
54.4
%
0.3 pts
Acquisition cost ratio
18.3
%
18.6
%
(0.3 pts)
Underwriting-related general and administrative expense ratio
13.9
%
14.7
%
(0.8 pts)
Combined ratio
86.9
%
87.7
%
(0.8 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
84.0
%
84.3
%
(0.3 pts)
Reinsurance Segment
Three months ended June 30,
($ in thousands)
2023
2022
Change
Gross premiums written
$
600,228
$
643,861
(6.8
%)
Net premiums written
425,336
447,428
(4.9
%)
Net premiums earned
422,994
508,328
(16.8
%)
Underwriting income
33,839
22,877
47.9
%
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
65.3
%
60.9
%
4.4 pts
Catastrophe and weather-related losses ratio
1.4
%
7.7
%
(6.3 pts)
Current accident year loss ratio
66.7
%
68.6
%
(1.9 pts)
Prior year reserve development ratio
(0.8
%)
(0.2
%)
(0.6 pts)
Net losses and loss expenses ratio
65.9
%
68.4
%
(2.5 pts)
Acquisition cost ratio
22.8
%
22.2
%
0.6 pts
Underwriting-related general and administrative expense ratio
4.6
%
5.3
%
(0.7 pts)
Combined ratio
93.3
%
95.9
%
(2.6 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
92.7
%
88.4
%
4.3 pts
Six months ended June 30,
($ in thousands)
2023
2022
Change
Gross premiums written
$
1,566,592
$
1,951,205
(19.7
%)
Net premiums written
1,151,116
1,416,387
(18.7
%)
Net premiums earned
836,738
1,013,758
(17.5
%)
Underwriting income
69,850
67,278
3.8
%
Underwriting ratios:
Current accident year loss ratio, excluding catastrophe and weather-related losses
64.2
%
60.3
%
3.9 pts
Catastrophe and weather-related losses ratio
2.3
%
6.6
%
(4.3 pts)
Current accident year loss ratio
66.5
%
66.9
%
(0.4 pts)
Prior year reserve development ratio
(0.8
%)
(0.3
%)
(0.5 pts)
Net losses and loss expenses ratio
65.7
%
66.6
%
(0.9 pts)
Acquisition cost ratio
21.5
%
21.9
%
(0.4 pts)
Underwriting-related general and administrative expense ratio
5.2
%
5.7
%
(0.5 pts)
Combined ratio
92.4
%
94.2
%
(1.8 pts)
Current accident year combined ratio, excluding catastrophe and weather-related losses
90.9
%
87.9
%
3.0 pts
Investments
Three months ended June 30,
Six months ended June 30,
($ in thousands)
2023
2022
2023
2022
Net investment income
$
136,829
$
92,214
$
270,601
$
183,569
Net investments losses
(24,370
)
(173,263
)
(44,558
)
(267,771
)
Change in net unrealized gains (losses) on fixed
maturities(5)
(72,887
)
(390,651
)
140,034
(845,936
)
Interest in income (loss) of equity method investments
2,100
1,050
(105
)
12,600
Total
$
41,672
$
(470,650
)
$
365,972
$
(917,538
)
Average cash and investments(6)
$
16,077,600
$
15,863,410
$
15,951,158
$
16,066,338
Total return on average cash and investments, pre-tax:
Including investment related foreign exchange movements
0.3
%
(3.0
%)
2.3
%
(5.7
%)
Excluding investment related foreign exchange movements(7)
0.1
%
(2.5
%)
2.0
%
(5.1
%)
5 Change in net unrealized gains (losses) on fixed maturities is calculated by taking net unrealized gains (losses) at period end less net unrealized gains (losses) at the prior period end.
6 The average cash and investments balance is calculated by taking the average of the period end fair value balances.
7 Pre-tax total return on cash and investments excluding foreign exchange movements is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to pre-tax total return on cash and investments, the most comparable GAAP financial measure, also included foreign exchange (losses) gains of $21 million and ($78) million for the three months ended June 30, 2023 and 2022, respectively and foreign exchange (losses) gains of $40 million and ($106) million for the six months ended June 30, 2023 and 2022, respectively.
Capitalization / Shareholders’ Equity
June 30,
December 31,
($ in thousands)
2023
2022
Change
Total capital8
$
6,333,967
$
5,952,224
$
381,743
Book Value per diluted common share
June 30,
March 31,
June 30,
2023
2023
2022
Book value per diluted common share9
$
50.98
$
50.31
$
47.62
Three months ended,
Twelve months ended,
June 30, 2023
June 30, 2023
Change
% Change
Change
% Change
Book value per diluted common share
$
0.67
1.3
%
$
3.36
7.1
%
Book value per diluted common share - adjusted for dividends declared
$
1.11
2.2
%
$
5.11
10.7
%
8 Total capital represents the sum of total shareholders' equity and debt.
9 Calculated using the treasury stock method.
Conference Call
We will host a conference call on Wednesday, August 2, 2023 at 9:30 a.m. (EDT) to discuss the second quarter financial results and related matters. The teleconference can be accessed by dialing 1-877-883-0383 (U.S. callers), or 1-412-902-6506 (international callers), and entering the passcode 2297226 approximately ten minutes in advance of the call. A live, listen-only webcast of the call will also be available via the Investor Information section of our website at www.axiscapital.com. A replay of the teleconference will be available for two weeks by dialing 1-877-344-7529 (U.S. callers), or 1-412-317-0088 (international callers), and entering the passcode 4929718. The webcast will be archived in the Investor Information section of our website.
In addition, an investor financial supplement for the quarter ended June 30, 2023 is available in the Investor Information section of our website.
About AXIS Capital
AXIS Capital, through its operating subsidiaries, is a global specialty underwriter and provider of insurance and reinsurance solutions. The Company has shareholders' equity of $5.0 billion at June 30, 2023, and locations in Bermuda, the United States, Europe, Singapore and Canada. Its operating subsidiaries have been assigned a financial strength rating of "A+" ("Strong") by Standard & Poor's and "A" ("Excellent") by A.M. Best. For more information about AXIS Capital, visit our website at www.axiscapital.com.
Website and Social Media Disclosure
We use our website (www.axiscapital.com) and our corporate LinkedIn (AXIS Capital) and X Corp. (@AXIS_Capital) accounts as channels of distribution of Company information. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, e-mail alerts and other information about AXIS Capital may be received by those enrolled in our "E-mail Alerts" program which can be found in the Investor Information section of our website (www.axiscapital.com). The contents of our website and social media channels are not part of this press release.
Follow AXIS Capital on LinkedIn and X Corp.
LinkedIn: http://bit.ly/2kRYbZ5
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2023 (UNAUDITED) AND DECEMBER 31, 2022
2023
2022
(in thousands)
Assets
Investments:
Fixed maturities, available for sale, at fair value
$
11,564,397
$
11,326,894
Fixed maturities, held to maturity, at amortized cost
717,310
698,351
Equity securities, at fair value
596,692
485,253
Mortgage loans, held for investment, at fair value
609,274
627,437
Other investments, at fair value
970,079
996,751
Equity method investments
148,183
148,288
Short-term investments, at fair value
46,282
70,310
Total investments
14,652,217
14,353,284
Cash and cash equivalents
1,173,925
751,415
Restricted cash and cash equivalents
344,345
423,238
Accrued interest receivable
100,915
94,418
Insurance and reinsurance premium balances receivable
3,371,439
2,733,464
Reinsurance recoverable on unpaid losses and loss expenses
5,865,609
5,831,172
Reinsurance recoverable on paid losses and loss expenses
572,757
539,676
Deferred acquisition costs
586,085
473,569
Prepaid reinsurance premiums
1,767,474
1,550,370
Receivable for investments sold
22,102
16,052
Goodwill
100,801
100,801
Intangible assets
192,342
197,800
Operating lease right-of-use assets
108,511
92,214
Other assets
457,171
438,338
Total assets
$
29,315,693
$
27,595,811
Liabilities
Reserve for losses and loss expenses
$
15,419,498
$
15,168,863
Unearned premiums
5,139,177
4,361,447
Insurance and reinsurance balances payable
1,783,610
1,522,764
Debt
1,313,006
1,312,314
Federal Home Loan Bank advances
85,790
81,388
Payable for investments purchased
81,835
19,693
Operating lease liabilities
121,922
102,577
Other liabilities
349,894
386,855
Total liabilities
24,294,732
22,955,901
Shareholders' equity
Preferred shares
550,000
550,000
Common shares
2,206
2,206
Additional paid-in capital
2,361,185
2,366,253
Accumulated other comprehensive income (loss)
(630,509
)
(760,300
)
Retained earnings
6,485,901
6,247,022
Treasury shares, at cost
(3,747,822
)
(3,765,271
)
Total shareholders' equity
5,020,961
4,639,910
Total liabilities and shareholders' equity
$
29,315,693
$
27,595,811
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022
Three months ended
Six months ended
2023
2022
2023
2022
(in thousands, except per share amounts)
Revenues
Net premiums earned
$
1,265,745
$
1,277,052
$
2,495,944
$
2,535,297
Net investment income
136,829
92,214
270,601
183,569
Net investment gains (losses)
(24,370
)
(173,263
)
(44,558
)
(267,771
)
Other insurance related income
5,524
2,213
6,100
8,906
Total revenues
1,383,728
1,198,216
2,728,087
2,460,001
Expenses
Net losses and loss expenses
736,257
769,587
1,456,899
1,502,285
Acquisition costs
253,265
257,582
483,638
505,932
General and administrative expenses
168,503
165,586
335,314
334,627
Foreign exchange losses (gains)
30,104
(57,000
)
38,814
(101,274
)
Interest expense and financing costs
16,738
15,241
33,632
30,805
Reorganization expenses
—
15,728
—
15,728
Amortization of intangible assets
2,729
2,729
5,458
5,458
Total expenses
1,207,596
1,169,453
2,353,755
2,293,561
Income before income taxes and interest in income (loss) of equity method investments
176,132
28,763
374,332
166,440
Income tax (expense) benefit
(27,558
)
4,965
(43,454
)
4,942
Interest in income (loss) of equity method investments
2,100
1,050
(105
)
12,600
Net income
150,674
34,778
330,773
183,982
Preferred share dividends
7,563
7,563
15,125
15,125
Net income available to common shareholders
$
143,111
$
27,215
$
315,648
$
168,857
Per share data
Earnings per common share:
Earnings per common share
$
1.68
$
0.32
$
3.71
$
1.98
Earnings per diluted common share
$
1.67
$
0.32
$
3.68
$
1.97
Weighted average common shares outstanding
85,207
85,173
85,036
85,068
Weighted average diluted common shares outstanding
85,812
85,843
85,833
85,826
Cash dividends declared per common share
$
0.44
$
0.43
$
0.88
$
0.86
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022
2023
2022
Insurance
Reinsurance
Total
Insurance
Reinsurance
Total
(in thousands)
Gross premiums written
$
1,684,150
$
600,228
$
2,284,378
$
1,469,622
$
643,861
$
2,113,483
Net premiums written
1,021,021
425,336
1,446,357
869,419
447,428
1,316,847
Net premiums earned
842,751
422,994
1,265,745
768,724
508,328
1,277,052
Other insurance related income
58
5,466
5,524
237
1,976
2,213
Net losses and loss expenses
(457,650
)
(278,607
)
(736,257
)
(421,836
)
(347,751
)
(769,587
)
Acquisition costs
(156,972
)
(96,293
)
(253,265
)
(144,732
)
(112,850
)
(257,582
)
Underwriting-related general and administrative expenses(10)
(113,534
)
(19,721
)
(133,255
)
(108,577
)
(26,826
)
(135,403
)
Underwriting income(11)
$
114,653
$
33,839
148,492
$
93,816
$
22,877
116,693
Net investment income
136,829
92,214
Net investment gains (losses)
(24,370
)
(173,263
)
Corporate expenses(10)
(35,248
)
(30,183
)
Foreign exchange (losses) gains
(30,104
)
57,000
Interest expense and financing costs
(16,738
)
(15,241
)
Reorganization expenses
—
(15,728
)
Amortization of intangible assets
(2,729
)
(2,729
)
Income before income taxes and interest in income of equity method investments
176,132
28,763
Income tax (expense) benefit
(27,558
)
4,965
Interest in income of equity method investments
2,100
1,050
Net income
150,674
34,778
Preferred share dividends
7,563
7,563
Net income available to common shareholders
$
143,111
$
27,215
Net losses and loss expenses ratio
54.3
%
65.9
%
58.2
%
54.9
%
68.4
%
60.3
%
Acquisition cost ratio
18.6
%
22.8
%
20.0
%
18.8
%
22.2
%
20.2
%
General and administrative expense ratio
13.5
%
4.6
%
13.3
%
14.1
%
5.3
%
12.9
%
Combined ratio
86.4
%
93.3
%
91.5
%
87.8
%
95.9
%
93.4
%
10 Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $35 million and $30 million for the three months ended June 30, 2023 and 2022, respectively. Underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.
11 Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to net income (loss), the most comparable GAAP financial measure, is presented above.
AXIS CAPITAL HOLDINGS LIMITED
CONSOLIDATED SEGMENTAL DATA (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
2023
2022
Insurance
Reinsurance
Total
Insurance
Reinsurance
Total
(in thousands)
Gross premiums written
$
3,099,762
$
1,566,592
$
4,666,354
$
2,796,886
$
1,951,205
$
4,748,091
Net premiums written
1,903,597
1,151,116
3,054,713
1,713,332
1,416,387
3,129,719
Net premiums earned
1,659,206
836,738
2,495,944
1,521,539
1,013,758
2,535,297
Other insurance related income
112
5,988
6,100
319
8,587
8,906
Net losses and loss expenses
(907,117
)
(549,782
)
(1,456,899
)
(827,579
)
(674,706
)
(1,502,285
)
Acquisition costs
(304,030
)
(179,608
)
(483,638
)
(283,543
)
(222,389
)
(505,932
)
Underwriting-related general and administrative expenses(12)
(230,164
)
(43,486
)
(273,650
)
(222,527
)
(57,972
)
(280,499
)
Underwriting income(13)
$
218,007
$
69,850
287,857
$
188,209
$
67,278
255,487
Net investment income
270,601
183,569
Net investment gains (losses)
(44,558
)
(267,771
)
Corporate expenses(12)
(61,664
)
(54,128
)
Foreign exchange (losses) gains
(38,814
)
101,274
Interest expense and financing costs
(33,632
)
(30,805
)
Reorganization expenses
—
(15,728
)
Amortization of intangible assets
(5,458
)
(5,458
)
Income before income taxes and interest in income (loss) of equity method investments
374,332
166,440
Income tax (expense) benefit
(43,454
)
4,942
Interest in income (loss) of equity method investments
(105
)
12,600
Net Income
330,773
183,982
Preferred share dividends
15,125
15,125
Net income available to common shareholders
$
315,648
$
168,857
Net losses and loss expenses ratio
54.7
%
65.7
%
58.4
%
54.4
%
66.6
%
59.3
%
Acquisition cost ratio
18.3
%
21.5
%
19.4
%
18.6
%
21.9
%
20.0
%
General and administrative expense ratio
13.9
%
5.2
%
13.4
%
14.7
%
5.7
%
13.1
%
Combined ratio
86.9
%
92.4
%
91.2
%
87.7
%
94.2
%
92.4
%
12 Underwriting-related general and administrative expenses is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to general and administrative expenses, the most comparable GAAP financial measure, also included corporate expenses of $62 million and $54 million for the six months ended June 30, 2023 and 2022, respectively. Underwriting-related general and administrative expenses and corporate expenses are included in the general and administrative expense ratio.
13 Consolidated underwriting income (loss) is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to net income (loss), the most comparable GAAP financial measure, is presented above.
AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURES RECONCILIATION (UNAUDITED)
OPERATING INCOME AND OPERATING RETURN ON AVERAGE COMMON EQUITY
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022
Three months ended
Six months ended
2023
2022
2023
2022
(in thousands, except per share amounts)
Net income available to common shareholders
$
143,111
$
27,215
$
315,648
$
168,857
Net investment (gains) losses (14)
24,370
173,263
44,558
267,771
Foreign exchange losses (gains)(15)
30,104
(57,000
)
38,814
(101,274
)
Reorganization expenses(16)
—
15,728
—
15,728
Interest in (income) loss of equity method investments(17)
(2,100
)
(1,050
)
105
(12,600
)
Income tax benefit
(4,308
)
(9,165
)
(7,893
)
(9,663
)
Operating income
$
191,177
$
148,991
$
391,232
$
328,819
Earnings per diluted common share
$
1.67
$
0.32
$
3.68
$
1.97
Net investment (gains) losses
0.28
2.02
0.52
3.12
Foreign exchange losses (gains)
0.35
(0.66
)
0.45
(1.18
)
Reorganization expenses
—
0.18
—
0.18
Interest in (income) loss of equity method investments
(0.02
)
(0.01
)
—
(0.15
)
Income tax benefit
(0.05
)
(0.11
)
(0.09
)
(0.11
)
Operating income per diluted common share
$
2.23
$
1.74
$
4.56
$
3.83
Weighted average diluted common shares outstanding
85,812
85,843
85,833
85,826
Average common shareholders' equity
$
4,440,595
$
4,361,586
$
4,280,436
$
4,506,644
Annualized return on average common equity
12.9
%
2.5
%
14.7
%
7.5
%
Annualized operating return on average common equity(18)
17.2
%
13.7
%
18.3
%
14.6
%
14 Tax expense (benefit) of ($2,352) and ($19,598) for the three months ended June 30, 2023 and 2022, respectively, and ($3,880) and ($32,912) for the six months ended June 30, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the ability to utilize capital losses.
15 Tax expense (benefit) of ($1,956) and $12,132 for the three months ended June 30, 2023 and 2022, respectively, and ($4,013) and $24,948 for the six months ended June 30, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the tax status of specific foreign exchange transactions.
16 Tax expense (benefit) of $nil and ($1,699) for the three months ended June 30, 2023 and 2022, respectively, and $nil and ($1,699) for the six months ended June 30, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.
17 Tax expense (benefit) of $nil for the three and six months ended June 30, 2023 and 2022, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions.
18 Annualized operating return on average common equity ("operating ROACE") is a non-GAAP financial measure as defined in SEC Regulation G. The reconciliation to annualized ROACE, the most comparable GAAP financial measure, is presented above, and a discussion of the rationale for its presentation is provided later in this press release.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts included in this press release, including statements regarding our estimates, beliefs, expectations, intentions, strategies or projections are forward-looking statements. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the United States federal securities laws. In some cases, these statements can be identified by the use of forward-looking words such as "may", "should", "could", "anticipate", "estimate", "expect", "plan", "believe", "predict", "potential", "intend" or similar expressions. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections, and various assumptions, many of which, by their nature, are inherently uncertain and beyond management's control.
Forward-looking statements contained in this press release may include, but are not limited to, information regarding our estimates for catastrophes and other weather-related losses including losses related to the COVID-19 pandemic, measurements of potential losses in the fair market value of our investment portfolio and derivative contracts, our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, the outcome of our strategic initiatives including our exit from catastrophe and property reinsurance lines of business, our expectations regarding pricing and other market and economic conditions including the liquidity of financial markets, developments in the commercial real estate market, inflation, our growth prospects, and valuations of the potential impact of movements in interest rates, credit spreads, equity securities' prices, and foreign currency exchange rates.
Forward-looking statements only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties, and assumptions. Accordingly, there are or will be important factors that could cause actual events or results to differ materially from those indicated in such statements. We believe that these factors include, but are not limited to, the following:
Insurance Risk
Strategic Risk
COVID-19
Credit and Market Risk
Liquidity Risk
Operational Risk
Regulatory Risk
Risks Related to Taxation
Readers should carefully consider the risks noted above together with other factors including but not limited to those described under Item 1A, 'Risk Factors' in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), as those factors may be updated from time to time in our periodic and other filings with the SEC, which are accessible on the SEC's website at www.sec.gov.
We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.
Rationale for the Use of Non-GAAP Financial Measures
We present our results of operations in a way we believe will be meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements we use are considered non-GAAP financial measures under SEC rules and regulations. In this press release, we present underwriting-related general and administrative expenses, consolidated underwriting income (loss), operating income (loss) (in total and on a per share basis), annualized operating return on average common equity ("operating ROACE"), amounts presented on a constant currency basis and pre-tax total return on cash and investments excluding foreign exchange movements which are non-GAAP financial measures as defined in SEC Regulation G. We believe that these non-GAAP financial measures, which may be defined and calculated differently by other companies, help explain and enhance the understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
Underwriting-Related General and Administrative Expenses
Underwriting-related general and administrative expenses include those general and administrative expenses that are incremental and/or directly attributable to our underwriting operations. While this measure is presented in the 'Segment Information' note to our Consolidated Financial Statements, it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.
Corporate expenses include holding company costs necessary to support our worldwide insurance and reinsurance operations and costs associated with operating as a publicly-traded company. As these costs are not incremental and/or directly attributable to our underwriting operations, these costs are excluded from underwriting-related general and administrative expenses, and therefore, consolidated underwriting income (loss). General and administrative expenses, the most comparable GAAP financial measure to underwriting-related general and administrative expenses, also includes corporate expenses.
The reconciliation of underwriting-related general and administrative expenses to general and administrative expenses, the most comparable GAAP financial measure, is presented in the 'Consolidated Segmental Data' section of this press release.
Consolidated Underwriting Income (Loss)
Consolidated underwriting income (loss) is a pre-tax measure of underwriting profitability that takes into account net premiums earned and other insurance related income (loss) as revenues and net losses and loss expenses, acquisition costs and underwriting-related general and administrative expenses as expenses. While this measure is presented in the 'Segment Information' note to our Consolidated Financial Statements, it is considered a non-GAAP financial measure when presented elsewhere on a consolidated basis.
We evaluate our underwriting results separately from the performance of our investment portfolio. As a result, we believe it is appropriate to exclude net investment income and net investment gains (losses) from our underwriting profitability measure.
Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on our net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio, including unrealized foreign exchange losses (gains) on our equity securities, and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities recognized in net investment gains (losses), and unrealized foreign exchange losses (gains) on our available for sale investments recognized in other comprehensive income (loss), generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio, thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As a result, we believe that foreign exchange losses (gains) in our consolidated statements of operations in isolation are not a meaningful contributor to our underwriting performance. Therefore, foreign exchange losses (gains) are excluded from consolidated underwriting income (loss).
Interest expense and financing costs primarily relate to interest payable on our debt and Federal Home Loan Bank advances. As these expenses are not incremental and/or directly attributable to our underwriting operations, these expenses are excluded from underwriting-related general and administrative expenses and, therefore, consolidated underwriting income (loss).
Reorganization expenses include compensation-related costs and software asset impairments mainly attributable to our exit from catastrophe and property reinsurance lines of business, part of an overall approach to reduce our exposure to volatile catastrophe risk, which was announced in June 2022. Reorganization expenses are primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from consolidated underwriting income (loss).
Amortization of intangible assets arose from business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from consolidated underwriting income (loss).
We believe that the presentation of underwriting-related general and administrative expenses and consolidated underwriting income (loss) provides investors with an enhanced understanding of our results of operations by highlighting the underlying pre-tax profitability of our underwriting activities. The reconciliation of consolidated underwriting income (loss) to net income (loss), the most comparable GAAP financial measure, is presented in the 'Consolidated Segmental Data' section of this press release.
Operating Income (Loss)
Operating income (loss) represents after-tax operational results exclusive of net investment gains (losses), foreign exchange losses (gains), reorganization expenses and interest in income (loss) of equity method investments.
Although the investment of premiums to generate income and investment gains (losses) is an integral part of our operations, the determination to realize investment gains (losses) is independent of the underwriting process and is heavily influenced by the availability of market opportunities. Furthermore, many users believe that the timing of the realization of investment gains (losses) is somewhat opportunistic for many companies.
Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on net insurance-related liabilities. However, we manage our investment portfolio in such a way that unrealized and realized foreign exchange losses (gains) on our investment portfolio, including unrealized foreign exchange losses (gains) on our equity securities and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities recognized in net investment gains (losses) and unrealized foreign exchange losses (gains) on our available for sale investments recognized in other comprehensive income (loss), generally offset a large portion of the foreign exchange losses (gains) arising from our underwriting portfolio, thereby minimizing the impact of foreign exchange rate movements on total shareholders' equity. As a result, we believe that foreign exchange losses (gains) in our consolidated statements of operations in isolation are not a meaningful contributor to the performance of our business. Therefore, foreign exchange losses (gains) are excluded from operating income (loss).
Reorganization expenses include compensation-related costs and software asset impairments mainly attributable to our exit from catastrophe and property reinsurance lines of business, part of an overall approach to reduce our exposure to volatile catastrophe risk, which was announced in June 2022. Reorganization expenses are primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, these expenses are excluded from consolidated operating income (loss).
Interest in income (loss) of equity method investments is primarily driven by business decisions, the nature and timing of which are not related to the underwriting process. Therefore, this income (loss) is excluded from operating income (loss).
Certain users of our financial statements evaluate performance exclusive of after-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses and interest in income (loss) of equity method investments in order to understand the profitability of recurring sources of income.
We believe that showing net income (loss) available (attributable) to common shareholders exclusive of after-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses and interest in income (loss) of equity method investments reflects the underlying fundamentals of our business. In addition, we believe that this presentation enables investors and other users of our financial information to analyze performance in a manner similar to how our management analyzes the underlying business performance. We also believe this measure follows industry practice and, therefore, facilitates comparison of our performance with our peer group. We believe that equity analysts and certain rating agencies that follow us, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons. The reconciliation of operating income (loss) to net income (loss) available (attributable) to common shareholders, the most comparable GAAP financial measure, is presented in the 'Non-GAAP Financial Measures Reconciliation' section of this press release.
We also present operating income (loss) per diluted common share and annualized operating ROACE, which are derived from the operating income (loss) measure and are reconciled to the most comparable GAAP financial measures, earnings (loss) per diluted common share and annualized return on average common equity ("ROACE"), respectively, in the 'Non-GAAP Financial Measures Reconciliation' section of this press release.
Constant Currency Basis
We present gross premiums written and net premiums written on a constant currency basis in this press release. The amounts presented on a constant currency basis are calculated by applying the average foreign exchange rate from the current year to the prior year amounts. We believe this presentation enables investors and other users of our financial information to analyze growth in gross premiums written and net premiums written on a constant basis. The reconciliation to gross premiums written and net premiums written on a GAAP basis is presented in the 'Insurance Segment' and 'Reinsurance Segment' sections of this press release.
Pre-Tax Total Return on Cash and Investments excluding Foreign Exchange Movements
Pre-tax total return on cash and investments excluding foreign exchange movements measures net investment income (loss), net investments gains (losses), interest in income (loss) of equity method investments, and change in unrealized gains (losses) generated by average cash and investment balances. We believe this presentation enables investors and other users of our financial information to analyze the performance of our investment portfolio. The reconciliation of pre-tax total return on cash and investments excluding foreign exchange movements to pre-tax total return on cash and investments, the most comparable GAAP financial measure, is presented in the 'Investments' section of this press release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230801108777/en/
Miranda Hunter (Investor Contact): (441) 405-2635; investorrelations@axiscapital.com Nichola Liboro (Media Contact): (917) 705-4579; nichola.liboro@axiscapital.com
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